NC House committee wants to close costly tax loophole for affordable housing ...Middle East

A Durham Housing Authority mixed-income project in Durham. (Photo: Greg Childress/NC Newsline)

A North Carolina House committee examining property tax reform is considering a sweeping proposal to close a tax loophole for low- and moderate-income housing that’s costing local governments tens of millions of dollars in revenue. 

The loophole in current law gives generous property tax cuts to for-profit apartment complex owners that partner with qualifying nonprofits, as NC Newsline previously reported.

The scheme, described by critics as a “rent-a-nonprofit structure,” allows for-profit apartment complex owners to take advantage of the tax exemption by handing over a fraction of ownership to a willing nonprofit.

The move can cost cities and counties tens of millions of dollars in property tax revenue, money that would otherwise go to fund schools, libraries, public safety and health and human services. 

Over the past two years, local governments have seen a dramatic increase in the use of the exemption by for-profits that own or purchase existing, already affordable properties, said Trina Griffin, a staff attorney with the General Assembly’s Legislative Analysis Division.

For-profit organizations partner with nonprofits as a “tax abatement strategy” without creating new affordable housing or ensuring the property remains affordable long-term, Griffin said.

Griffin explained that under the current law, a nonprofit that provides housing for low- and moderate-income individuals is eligible for a 100% property tax exemption, “and there’s not much more to the current law than that in terms of detail.”

Under proposed revisions introduced to the House Select Committee on Property Tax Reduction and Reform Wednesday, property owners’ eligibility for the tax break would hinge on whether a property is financed with government funds, such as the Low-Income Housing Tax Credit [LIHTC].

“This draft would update this statute to provide guardrails that would ensure the tax benefit is afforded to those who provide long-term affordable housing, consistent with similar standards that are required for LIHTC projects,” Griffin said.

Griffin said government financing comes with rent and income restrictions to ensure affordability. And even with additional private funding, property owners must meet rent and income requirements for 15 years, she said.

Under the new rules, properties that are not financed with government support must be 100% owned and operated by an eligible nonprofit that has owned and operated affordable rental housing for at least five years. The nonprofit may not lease the property to another entity or receive funding or financial assistance from a for-profit organization.

The bill would require that, to be eligible for an affordable housing tax break, more than 50% of units in a housing development must meet rent and income limits set by the U.S. Department of Housing and Urban Development. The income limit is 80% of area median income, adjusted for family size. The rent limit means the rent charged cannot exceed 30% of the income limit. 

The bill also clearly spells out who is eligible for the exemption. Eligible owners would include:

Eligible nonprofit property owners would have two options to qualify for tax breaks.

Under one option, the exemption would be tied to the percentage of units that meet rent and income limits. If 60% of the units, for example, meet the requirements, then the owner would get a 60% exemption.

Under the other option, property owners who meet the IRS’s safe harbor requirements for low-income housing could receive a 100% exemption. Under that IRS requirement, organizations can qualify for the tax exemption if at least 75% of units are occupied by low-income tenants earning  80% or more of area median income, and 20% are occupied by extremely low-income families earning 50% or more less of area median income.

Property owners currently receiving the exemption would have to reapply under the new law and show that they meet all of the new requirements. 

The loophole was created in 2013 when the NC Court of Appeals ruled that Cane Creek Village, a low-income housing project in Mitchell County owned by a for-profit limited liability company but controlled by a nonprofit, was entitled to a property tax exemption under state law. 

Northwestern Housing Enterprises, Inc., the nonprofit in that case, owned 0.1% of Blue Ridge Housing, which held the title to the property. A for-profit partnership, North Carolina Equity Fund III Limited Partnership, owned 99.9% of Blue Ridge Housing.

State Rep. Maria Cervania (D-Wake) asked if there would be adequate oversight to ensure for-profit organizations don’t find a new loophole.

“How do we make sure that localities, nonprofit, all the different potential funders and implementers of this housing — [how do we keep] a check on what’s happening?” Cervania asked. 

Griffin said the IRS and the NC Housing Finance Agency provide “extensive oversight” when properties have public financing.

“They’re sort of providing that back check on a regular basis,” she said.  

The committee plans to vote on recommended legislation April 15th. If approved, the proposal would be eligible for consideration in the upcoming short session. 

Hence then, the article about nc house committee wants to close costly tax loophole for affordable housing was published today ( Thursday 19/03/2026 - 01:15 PM ) and is available on NC news line ( Middle East ) The editorial team at PressBee has edited and verified it, and it may have been modified, fully republished, or quoted. You can read and follow the updates of this news or article from its original source.

Read More Details
Finally We wish PressBee provided you with enough information of ( NC House committee wants to close costly tax loophole for affordable housing )

Also on site :

• Ryan Gosling Says Harrison Ford’s “Not Like Us” After Seeing Him “House Half a Bottle of Advil as a Joke”
• Macy’s 'Sparkly' $34 Crystal Stud Earrings Look 'High-End' and They 'Go With Everything'
• Sundance-Winning Iranian Filmmaker’s ‘Rainy Dreams’ Explores Children’s Nightmares Amid Displacement at Hong Kong Financing Forum